Correlation Between Spirent Communications and Global Net
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Global Net at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Spirent Communications and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Global Net Lease, you can compare the effects of market volatilities on Spirent Communications and Global Net and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Spirent Communications with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Global Net.
Diversification Opportunities for Spirent Communications and Global Net
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and Global is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Spirent Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Spirent Communications plc are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Spirent Communications i.e., Spirent Communications and Global Net go up and down completely randomly.
Pair Corralation between Spirent Communications and Global Net
Assuming the 90 days trading horizon Spirent Communications is expected to generate 5.27 times less return on investment than Global Net. But when comparing it to its historical volatility, Spirent Communications plc is 1.45 times less risky than Global Net. It trades about 0.0 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,106 in Global Net Lease on October 11, 2024 and sell it today you would lose (366.00) from holding Global Net Lease or give up 33.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.39% |
| Values | Daily Returns |
Spirent Communications plc vs. Global Net Lease
Performance |
| Timeline |
| Spirent Communications |
| Global Net Lease |
Spirent Communications and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Global Net
The main advantage of trading using opposite Spirent Communications and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Global Net can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global Net will offset losses from the drop in Global Net's long position.| Spirent Communications vs. Axway Software SA | Spirent Communications vs. Take Two Interactive Software | Spirent Communications vs. Mobius Investment Trust | Spirent Communications vs. Oxford Technology 2 |
| Global Net vs. Mobius Investment Trust | Global Net vs. Silver Bullet Data | Global Net vs. MTI Wireless Edge | Global Net vs. Seraphim Space Investment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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